Tuesday 23 January 2018

CSO data highlights potential for growth

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Ellie Donnelly and Colm Kelpie

The unemployment rate peaked at a significantly worse level in 2011 than was thought at the time, new data from the Central Statistics Office (CSO) shows.

The unemployment rate fell to 6.1pc in November from 6.3pc in October, but that compared to an initial estimate of 6pc last month. The way the jobless rate is calculated has been revised following the introduction of a new labour force survey.

The revisions showed that the number of people out of work peaked at 15.9pc in 2011, not 15.1pc as reported at the time.

The latest data suggests that estimates that Ireland is close to what's regarded as full employment are wide of the mark, which in turn suggests there's less risk of the economy overheating even if growth remains strong.

The CSO said the new estimates are still preliminary and will be further revised next month. Meanwhile, Friends First economist Jim Power has warned that policy makers must place more emphasis on supporting the home-grown economy in order to reduce reliance on volatile corporation tax receipts.

In its latest economic assessment, the insurer said global corporation tax developments, fuelled by pressure from other EU member states, as well as US President Donald Trump's increasingly protectionist policies, present the potential to pressurise Ireland's FDI model over the coming years.

It was a similar message from the Nevin Economic Research Institute (Neri) in its latest economic commentary.

The think tank said the country's "apparent facilitation of aggressive corporate tax avoidance is likely to come under increasing pressure" from momentum towards a Common Consolidated Corporate Tax Base (CCCTB)," to which Ireland is opposed.

"The unsustainability of the current model suggests the need to develop a more balanced industrial strategy focused on a policy of developing indigenous companies," the report noted.

It comes a day after the latest Exchequer Returns show that corporation tax receipts to the end of November are €396m, or 5.5pc higher than expected.

Seamus Coffey, chairman of the Fiscal Advisory Council, tweeted that December tax returns are volatile but that if monthly profiles are met, then the corporation tax total for the year will exceed €8bn and be 16pc of exchequer tax receipts.

Meanwhile, growth in the services sector moderated to its slowest pace in 12 months in November, according to the latest Investec Services PMI report.

The PMI reading for November of 56, means business activity in the sector continued to expand at a healthy pace.

Irish Independent

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